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Last update - 23:14 22/06/2008 CEO received millions for unnecessary deal By Yossi Melman Tags: Shimon Eckhaus, Israel Shimon Eckhaus, CEO of the satellite imaging company ImageSat International (ISI), became several million shekels richer last week. Eckhaus, who has held the job for about three years, sued the company through the office of Attorney Eyal Rosovsky, claiming that he is entitled to a bonus of millions of dollars. According to Eckhaus, the bonus is a binding part of his employment contract and resulted from a deal the company struck in Angola some seven years ago. Even though he sued the company, its owners decided to keep Eckhaus on as CEO. Attorney Orna Linn, representing ImageSat, responded that Eckhaus is not entitled to the payment because the deal was implemented before he started working for the company. The parties agreed to arbitration, and the arbitrator, retired Justice Amnon Strasnov, ruled that Eckhaus should be paid a bonus amounting to half the sum he sued for. ImageSat is a consortium jointly owned by Israel Aircraft Industries (IAI, with about 40 percent), Elbit and El-Op (less than 10 percent) and private investors from the U.S., Europe (including the Pegasus Fund) and Israel. It was founded in the mid-1990s, after the successful launch of the Israeli-made Ofek series of spy satellites. Steven Wilson, an American entrepreneur who owns a software company, persuaded IAI to integrate software his company developed into the spy satellite for civilian purposes. Advertisement Even though ImageSat is controlled by Israeli security industries and under Defense Ministry supervision, a decision was made to register it in Cyprus in order to benefit from the tax shelter there. Over the years, the company also became a profit haven for former IAI employees, who could enjoy terms of employment that they did not have with the parent company. ImageSat launched the IAI-developed Eros satellite into space in 2000 and its images - which are high resolution but not military quality - are sold to customers around the world. In its third year, the company's total orders reached some $250 million. However a year ago, Wilson and several other investors filed in a U.S. court a suit for over $2 billion against the company and its owners, IAI and Elbit. The appellants claimed that even though they were assured that the company would only consider commercial factors when working on behalf its shareholders, it capitulated to Defense Ministry pressure and canceled, among other things, large deals with Taiwan and Venezuela in order not to anger China and the U.S. Among the appellants is Morris Talansky, a key witness in bribery accusations against Prime Minister Ehud Olmert, who has options in the company, although they apparently have already expired. Another appellant is Brigadier General Haim Yifrah, a former senior military intelligence officer who was a consultant to the company. The generous payment to Eckhaus opens a window onto the secret world of the Israeli defense industry's operations in Third World countries. The industries, greedy arms dealers and shady mediators are not averse to using aggressive sales promotion techniques to persuade corrupt officials and ministers in those countries to acquire products and services at outrageous prices, even when they don't need them. At the start of the decade, the Angolan government signed a $150 million deal for the purchase of satellite photos from ImageSat, in order to improve its intelligence capabilities in the civil war against the forces of Jonas Savimbi. As part of the deal, ImageSat was to have set up a ground station in Angola to receive the photos, at a cost of some $20 million. The rest of the money was intended to pay for the imagery services over the course of a decade. Arcadi Gaydamak's business partner in Angola, Pierre Falcone, was the mediator in the deal. Unlike Gaydamak, Falcone appeared for questioning in France and even spent some time in jail. While in jail, Falcone remained involved in mediating the ImageSat deal. A short time later, Patrick Rosenbaum, ImageSat's deputy CEO for marketing who was a key figure in promoting the deal, began working for one of Falcone's companies. After the Angolan army was dissatisfied with the quality of the service it received, and upon the war's end after Savimbi was killed in 2002, Angola asked to terminate or change the contract. ImageSat, then under the management of Menashe Broder, refused and forced Angola to pay the full sums specified in the contract, even though the ground station was never built. The payment arrived when Eckhaus was already the CEO, and therefore he claimed to be entitled to the bonus. In his response, Eckhaus refused to address the matter, saying that it is a private matter he is not required to report to the public. The chairman of ImageSat's board of directors, David Artzi, declined to comment on the matter. Falcone and Rosenbaum's reactions were unavailable. Bookmark to del.icio.us   Sarkozy's promise 'France will never compromise Israel's security' Israel's agenda Is an Israeli strike on Iran still on the government's agenda?   1.   Eckhaus is right 08:36  |  Charlie 23/06/08

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